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To ensure developers build what they pledge, the city should consider not giving them the break they now enjoy on development charges, a former mayor says.

The issue of how to ensure sites aren’t left vacant after buildings are torn down is front and centre at city hall.

City council will discuss Tuesday recommendations from the planning and environment committee to allow Rygar Corp. Inc. to demolish a building at 150 Dundas St. to make way for a student-­oriented, 27-storey highrise residential ­tower.

If city council approves the demolition application, and construction is delayed or Rygar decides not to build, it will leave a gap in the Dundas streetscape city officials want to avoid.

Under current rules, when a residential development is built downtown or in Old East Village, the builder doesn’t pay development charges, fees the city charges on new development to pay for costs such as roads, sewers and police.

Ratepayers pick up the tab for the projects to encourage building downtown and in Old East.

It’s a significant incentive, with Rygar in line for a $3.7 million break from the city for its 150 Dundas Street proposal.

Rygar Corp. rendering shows the highrise proposed for 150 Dundas St.

But if developers don’t build projects, they should lose their exemption from paying development charges, said Joni Baechler, a former London mayor and councillor who chaired the city’s planning and environment committee.

“If you don’t build within a certain period of time, you don’t get exemptions,” she said.

“They could rewrite the bylaw that (developers) have to act within a reasonable time frame. If it’s an important parcel of land, they have to build or they are on the hook for it, not taxpayers.”

At a planning committee meeting July 31, the issue was raised that Rygar also plans to build a 700-unit multi-tower development on Talbot Street. Two major developments may be too ambitious for a company that has not built a highrise, people who follow the development industry in London say.

If there are delays in Rygar’s project following demolition of the building at 150 Dundas St., it will be a vacant lot and an ugly gap in the streetscape, politicians fear.

“It’s an interesting point. We can use that lever,” said Coun. Stephen Turner, who raised concerns over a potential vacant lot at the planning committee meeting.

“They would have to develop it or the incentive would not apply. We need to look at using incentives effectively. We have to make sure they do what they say they want to.”

The city has received proposals to build highrise towers at 199 Queens Ave. and at the former downtown library, but nothing has been built. A heritage home at 199 Queens Ave. was torn down for what is now a parking lot.

In January, the city will alter the way developers get a break on development charges. They will have to pay them and be refunded during a 10-year period.

The development charge rebate is now a grant under the downtown community improvement plan, said Paul Yeoman, director of development services for the city.

“We now don’t have performance reviews associated with that grant. There is no criteria as to who gets it,” said Yeoman. “We could look at that. We could investigate.”

Developers speaking off the record say deep pockets are needed to build a highrise.

A residential tower may cost as much as $60 million. To get bank financing, 60 per cent of the units need to be pre-sold. If commercial lenders won’t support the venture, the builder has to finance, meaning it has to have resources, or be able to line up investors.

The city has more than 10 proposals and applications for residential towers downtown. But during the last 10 years, Tricar Group is the only builder to have a crane in the core.

The planning department used what tools it has for Rygar’s project at 150 Dundas, tying the demolition permit to a building permit. It also banned using the lot for parking after the building is demolished.

But at the July 31 planning committee meeting, planning staff was clear it has limited authority to ensure building.

“We can’t compel anyone to build anything. We can permit it to happen, we cannot compel it to happen. No one wants a missing tooth in the smile on Dundas Street,” city heritage planner Jim Yanchula said.